Division of the Budget
Landon State Office Building Phone: (785) 296-2436
900 SW Jackson Street, Room 504 adam.c.proffitt@ks.gov
Topeka, KS 66612 http://budget.kansas.gov
Adam Proffitt, Director Laura Kelly, Governor
Division of the Budget
February 10, 2023
The Honorable Renee Erickson, Chairperson
Senate Committee on Commerce
300 SW 10th Avenue, Room 546-S
Topeka, Kansas 66612
Dear Senator Erickson:
SUBJECT: Fiscal Note for SB 91 by Senate Committee on Commerce
In accordance with KSA 75-3715a, the following fiscal note concerning SB 91 is
respectfully submitted to your committee.
SB 91 would enact the Kansas Film and Digital Media Production Development Act. The
purpose of the Act is to incentivize film, video, or digital media productions in Kansas and
facilitate the development and growth of a film, video, or digital media production industry and
associated businesses supporting the industry in this state. The Act creates the Kansas Film and
Digital Media Industry Development Program at the Department of Commerce with the assistance
of the Kansas Creative Arts Industries Commission.
The Act would provide an income tax credit not to exceed $10.0 million per fiscal year to
production companies approved by the Department of Commerce, including the requirement that
at least 10.0 percent of the total tax credits approved each year would be for Kansas-based
production companies. Eligible production companies could be eligible for a 30.0 percent
refundable income tax credit for qualified production and certain postproduction expenditures.
The Secretary of Commerce could approve additional credits as follows:
1. The amount of the tax credits could increase by up to 5.0 percent if the qualified
expenditures enhance the film-related infrastructure or workforce development in Kansas.
2. The amount of the tax credits could increase by up to 5.0 percent if 50.0 percent or more
of the crew or above-the-line personnel are Kansas residents.
The Honorable Renee Erickson, Chairperson
Page 2—SB 91
3. The amount of the tax credits could increase by up to 5.0 percent if a production company
previously qualified for this income tax credit.
The Act caps the maximum tax credit amount to 40.0 percent of total qualified production
expenditures or qualified postproduction expenditures made by the production company for the
certified project during that taxable year. The Act includes minimum productions expenses and
other requirements in order to qualify for the income tax credits. The Act also allows certain
Kansas-based production companies that incur at least $25,000 in qualified expenditures on a
certified production not intended for multimarket distribution but that otherwise would be qualified
expenditures and meets all other qualifications for a tax credit to receive a 25.0 percent non-
refundable tax credit.
The bill would also exempt from sales tax purchases of tangible personal property or
services for the purpose of a certified project by a production company that meet the requirements
of the Act. The sales tax exemption would also be extended for any contractor hired for the
construction, reconstruction, enlarging, or remodeling of facilities used on certified project that
would qualify as a production or postproduction expenditure. The bill includes reporting
requirements for contractors and penalties for the use of the sales tax exemption that is determined
to not be part of this project which would be punishable as a misdemeanor. The sales tax
exemption and income tax credit provisions of the bill would sunset prior to January 1, 2033.
The bill would transfer $1.0 million from the State General Fund to the newly created
Kansas Film and Digital Media Production Development Act Education Fund on July 1, 2023, and
each July 1st through July 1, 2032. The Department of Commerce would be allowed to award
grants for educational purposes or programs to develop and support the Kansas film and digital
media industry. The purpose of the grants would be to develop, expand, and improve Kansas
educational programs directly relevant to development and support of the film and digital media
industry in this state. The grants would be available to any not-for-profit postsecondary
educational institutions with a main campus or principal operations in Kansas, including public or
private four-year universities or colleges, community colleges, technical colleges, and the
Washburn Institute of Technology.
The bill would transfer $1.0 million from the State General Fund to the newly created
Kansas Film and Digital Media Production Development Act Workforce Training and Business
Direct Investment Fund on July 1, 2023, and each July 1st through July 1, 2032. The Department
of Commerce would be allowed to award grants or loans from the Kansas Film and Digital Media
Production Development Act Workforce Training and Business Direct Investment Fund in
connection with certified projects. The grants or loans would help develop the Kansas film and
digital media industry by funding workforce training and by investing directly in Kansas
companies engaged in or seeking to engage in a certified project.
The Department of Revenue and the Department of Commerce would both have the
authority to write rules and regulations to implement the bill. The Department of Commerce would
be required to submit an annual report to the House Committee on Commerce, Labor and The Honorable Renee Erickson, Chairperson
Page 3—SB 91
Economic Development, House Committee on Taxation, Senate Committee on Commerce, and
Senate Committee on Assessment and Taxation. The annual report would include the amounts
and recipients of the tax incentives for the prior fiscal year and to the date of the report, anticipated
tax incentive amounts for the current fiscal year, the production companies that have applied for
and that have been certified for projects, a description of ongoing and completed projects, and the
impact of the projects and the program on the film, video, or digital production industry in Kansas.
The annual report would also detail the administration, accomplishments, and progress of the
Kansas Film and Digital Media Production Development Act Education Fund and the Kansas Film
and Digital Media Production Development Act Workforce Training and Business Direct
Investment Fund.
The Department of Revenue estimates that SB 91 would decrease State General Fund
revenues by $12.0 million in FY 2024, and in each future fiscal year through FY 2033. The
Department of Revenue indicates that the Department of Commerce would review and approve
film incentive projects that could be eligible for this new income tax credit program. The
Department of Revenue assumes that the full amount of $10.0 million in allowable credits would
be awarded by the Department of Commerce each fiscal year. In addition, the bill authorizes two
$1.0 million transfers each year from the State General Fund for two separate grant programs to
develop and grow the film, video, or digital media production industry in Kansas. The Department
of Revenue would issue project exemption certificates for the sale tax exemption component of
the film incentive package. However, the Department of Revenue does not have data on the
number of film productions that would qualify for the sales tax exemption to provide an estimate
for this component of the bill.
The Department of Revenue indicates that it would require a total $148,851 from the State
General Fund in FY 2024 to implement the bill and to modify the automated tax system. The
required programming for this bill by itself would be performed by existing staff of the Department
of Revenue. In addition, if the combined effect of implementing this bill and other enacted
legislation exceeds the Department’s programming resources, or if the time for implementing the
changes is too short, additional expenditures for outside contract programmer services beyond the
Department’s current budget may be required.
The Department of Commerce indicates that bill would require $90,633 from the State
General Fund in FY 2024 to implement this new program. The bill would require the Department
hire 1.00 new FTE position to manage this new program.
The Kansas Department of Transportation (KDOT) indicates that the bill would reduce
state revenues to the State Highway Fund by unknown amounts. KDOT indicates that when the
state receives lower State Highway Fund dollars it may be required to make corresponding
reductions to planned expenditures for projects funded under the comprehensive transportation
plan. The fiscal effect associated with the $10.0 million cap on the film, video, or digital media
production income tax credit provisions in SB 91 are reflected in The FY 2024 Governor’s Budget
Report.
The Honorable Renee Erickson, Chairperson
Page 4—SB 91
The Kansas Association of Counties and the League of Kansas Municipalities indicate that
the bill has the potential to provide a net reduction to local sales tax collections that are used in
part to finance local governments. However, depending on the overall level of film, video, or
digital media production expenditures, the bill has the potential to increase economic development
and employment opportunities for Kansas communities.
Sincerely,
Adam Proffitt
Director of the Budget
cc: Lynn Robinson, Department of Revenue
Sherry Rentfro, Department of Commerce
Brendan Yorkey, Department of Transportation
Wendi Stark, League of Kansas Municipalities
Jay Hall, Kansas Association of Counties
Becky Pottebaum, Board of Regents